While the credit card industry offers an option for customers to delay payments until a monthly due date without penalty, payments that are made after the due date typically incur finance charges, interest, penalties, or a combination thereof. While the credit payment cycle traditionally repeats on a monthly basis, many customers, in particular small business customers, do not have consistent monthly cash flow and therefore find the credit card system unduly burdensome and inconvenient. Such businesses may instead opt to take a direct line of credit from vendors associated with the same industry, as these vendors are likely to offer more flexible payment terms.
However, even a direct line of credit from a vendor may not provide adequate flexibility for all customers. For example, many small businesses operate on a seasonal basis and may have consistent cash flow through one or two seasons and virtually no incoming revenue through the remaining seasons. For example, those in the construction business, a landscaping business, or a water sports business may have ample summer revenue, but very little winter revenue. Similarly, customers in winter sports related businesses, snow plow operators, or those operating businesses in winter resort areas may operate at full capacity in the winter, but in a very limited capacity in the off-season.
Additionally, within the routine operating parameters of a small business, cash flow may be inconsistent. For example, a contractor may use a credit card to buy materials for a remodeling, job for a client. The client may have only paid the contractor 10% of the total cost upon accepting the bid. Thus, in this month, the contractor may have suffered a net loss due to the cost of materials and will need flexibility to make a late payment. However, the next month, the contractor may be paid in full for a job and may be able to make an early payment. Alternatively, in some circumstances, a business owner may be compelled to skip a monthly payment entirely when cash flow is reduced.
Although it is known in the credit card industry to provide various rewards platforms, customers have been typically unable to use these rewards to introduce flexibility into their individual repayment agreements. Furthermore, although it is known to allow credit card holders to carry a balance, this balance is subject to various fees and thus does not introduce true flexibility in the repayment program to meet the needs of customers having a business cycle that does not correspond to the typical monthly credit card repayment cycle.
Accordingly, a credit payment solution is needed that attract business owners by providing greater flexibility of payment terms on an ongoing basis. The solution should provide credit customers with the ability to manage credit payments in view of inconsistent cash-flow. The flexibility is particularly useful to small business owners as they often struggle with cash flow management.